Case #5 – Addendum

Dear students,
this is a brief guide to your market research. It aims at giving you a
major insight into the SPSS use and the results we would like you to
extrapolate from the dataset.
It does not intend to be exhaustive and comprehensive rather it
complements the “Introduction to case 5” available on-line. It has been
meant to answer the most frequent questions.
Hope this can help you! Nonetheless, if any of my comments are not
convincing you, please feel free to go your own way!
The Dataset
• The dataset includes some empty cells that could bother your analysis. However
your SPSS tool work well without taking care of them: every time it sees an empty
cell it is supposed to skip the entire row.
• Make some preliminary analysis on your data and find out the main characteristics
of your sample. Therefore:
– How your sample is distributed between male and female?
– What’s the mean age of the respondents?
– Do they have a music player or not?
– And so forth …
– Please, do not spend more than 5 minutes on this activity
• Move to analyze the secondary needs through a Factor Analysis and see if it works
from two main perspectives:
– The marketing & sales division (can we easily interpret such data?)
– The statistical correctness (remember you guys are engineers: do these data make sense,
statistically?)
• Please, tackle the project by using my comments and the notes from professor
Cantamessa.
• SPSS note: SPSS 17.0 is heavy and slows down your laptop. Let it take its time!
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The Secondary Needs
• Secondary needs are listed for instance questions #13. We use them to figure out
whether there are one or more market segments, or not. Should a market segment
exist we would address the product development to include those technical
specifics that actually satisfy the highlighted needs.
• You perform a Factor Analysis to see how it is possible for you to aggregate the
needs into subgroups of secondary needs. This make your analysis easier.
• Before launching an FA, look at the dataset to see if there are some answers that
do not make sense to you. For instance, should a respondent have placed the
same score on all the questions for #9, this could bias your analysis.
• It could happen for a variable as well (i.e. all respondents have placed the same
score on a variable). Hence I suggest that you:
– Look carefully at the dataset: do you see any bias?
– Plot the frequencies diagrams for all #9 sub-questions: can you see any drawback?
• SPSS command: Analyze, Descriptive Statistics, Frequencies, then just plot the bar
diagrams (or make the overall analysis. It’s up to you!)
• Some variables look like problematic: can you see them? If yes, just take them in
your mind but do not throw them away yet!
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Factor Analysis – The Flow You Should Follow
• SPSS command: Analyze, Data (or Dimension) Reduction, Factor to display the tool
window to set and launch the FA.
• As for the parameters:
– Descriptives: coefficients, KMO (hopefully ≥ 0.7), anti-image (it is important as it shows the MSA
scores for each variable on the main diagonal. If the score is less than 0.7, that variable is less
significant)
– Extraction: play on it as you want however you don’t want more than 3 principal components.
Therefore set a fixed number of factors for your extraction
– Rotation: ask for the loading plots and do not rotate the solution at the beginning. Then rotate it
– Factor scores: to be displayed
– Options are up to you
• Launch the FA, see the results, make your comments and move back to the dataset
– How do your components look like? Do they tell you anything meaningful? Are they uncorrelated?
– Should you move back and cut off some variables? If yes, why?
– Perform a new analysis and see how the result changes. Then insert again the variables one-by-one
and appreciate how the results change.
• Finally make a decision on your factors. Actually I see only 2 factors as a valid
solution. Please, give them a name and step forward to positioning the
respondents on the primary needs.
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 Factor Analysis – What you Should Look at…
Results are from a starting analysis including 3 components.
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• The Correlation Matrix allows you to understand if the
variables are correlated. If they are not you should
consider to cut them off. As a rule, a correlation
across-all-the-variables ≤0.3 sounds like a warming.
• KMO MSA test is expected to be ≥ 0.7 as well as the
MSA values on the main diagonal of the Anti-mage
Matrix. Should a variable’s MSA be ≤ 0.7 you should
consider to cut it off
• Communality is the explained variance for a variable
on the total variance.
• Use the Component Matrix to pair each variable with
a component:
– Is the component explaining a variable with a high score?
– If a variable has low score on all the components you should
consider to move back and cut it off.
• The component score coefficient matrix needs to
show low covariance (≤0.3)
• The component plot is great to have a visual aid for
finding out any clear cluster of variables! Use it to pair
your variables with the factors
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Factor Analysis – the Main Results I Can See

• Starting with all secondary needs, 3 components do not explain that much! Well, the Ph.D.
wouldn’t be that happy but as part of the Business Development team you’re looking for
useful responses from your potential market. Put in other words, you have to settle for them!
• Try harder by changing the rotation methodology to make the first components better explain
the variance. Can you see anything interesting? To me … actually no!
• Let’s repeat now the FA by extracting only 2 factors. How is your component plot like? Can
you see any cluster of points? Probably still not.
• Well … we better move back and cut off some variables that are not good.
– From the correlation matrix I see at least 5 variables (a, b, f, g, m) that are not good
– From the anti-image matrix I see 2 variables (c, f) that are not good

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Factor Analysis – Let’s Start Over!
• Cut off some secondary needs according to your analyses. I suggest that you start
by keeping out variables b, g and f. Why? You might question. Because they have
low correlation in the correlation matrix. And I take a and m alive because they
sound like important as secondary needs of my market.
• Note: it is my personal idea. You might not agree with me!
• Run a new FA and see how it performs with 3 and 2 components. Set the rotation
method as “Oblimin” or “Varimax”. Using the component plot should help you in
identifying better results now. How do they look like now? Take the best one.
• If I’m not wrong, you should now see two clouds of points staying on the two
components plus one or two points (i.e. secondary needs) behaving a little bit
curiously! And what about component correlation matrix: are the 2 factors
uncorrelated enough?
• As I wrote before, now:
– Play with the rotation methods to better explain the variance
– Play with the extraction methods
– Move back and add one-by-one the variables kept out: how the result changes? And what about the
correlation matrix for the components?

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Factor Analysis – Last Steps

• Remember to save the two components as variables, then give them a name.
• Test the reliability of your secondary needs on the related factor:
– SPSS command: Scale, Reliability Analysis …
– Are these solutions robust?
• At this point I expect that you pick up a final solution for the primary needs and
keep on working with them
• Your job now is to see how your categorical variables behave on each factor. Use
plots and scatters, and compare sample medians and dispersions
• Note: look carefully at the graph tool. It could not work as it reads no categorical
(i.e. nominal) variables. If it is your case, open the variable view and set the scale
of your variables.
• Depending on the graphs you come out with, you should understand sometimes
there is a potential target leading you to hypothesize a product specific as for
aesthetic, connectivity, and so forth.

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